Trade notes: invest more profitably

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Commercial or corporate notes are a somewhat atypical investment product in that they are not listed on the financial markets. However, these operations are not covered by the Deposit Guarantee Fund (FGD), as is the case with term deposits. It is a small risk that you must bear when taking over the investment because in the worst case scenario you can lose the money that you have allocated to these movements within a company of these characteristics.

Sea cual sea el caso, originan una rentabilidad que oscila between 3% and 8%, depending on the level of solvency of the issuers of this financial instrument. Whatever the case, it is a significantly higher interest rate than that offered by fixed-income derivative products and, of course, also by banking products (high-income accounts, time deposits or corporate bonds). Where it rarely exceeds levels of 1.5% and that do not satisfy your needs to make operations profitable as you want.

Commercial paper is one of the most unknown products of private fixed income. Not because they are far from the investors' intentions. If not, why not contemplate a fixed period in their issuance since they can go on the market at any time and depending on the financing needs of the companies. In return, the recipients of these proposals receive a refund of the money borrowed. They are assets with implicit return issued at a discount.

Trade notes: maturities

Maturity is short-term, from a few days to up to 24 months approximately, the most common hiring periods are six, twelve and up to 16 months. This particularity benefits its applicants who can adjust to the most desired terms depending on their need for liquidity. Of course, it is exactly these terms that make promissory notes of these characteristics more flexible products for your real investment needs since you can adapt them to any type of maturity depending on the profile you present as a small and medium investor.

Whatever the case, it is a more delicate investment model than the others due to its special characteristics. Where the solvency of the issuing companies of this financial instrument plays a very relevant role for its formalization. Among other reasons, because in case of bankruptcy the money invested will be lost since no amount is guaranteed.

They are covered up to 100,000 euros

As with term deposits in which up to 100,000 euros per deposit and holder are covered through the Deposit Guarantee Fund. For this reason, it is very important to analyze the financial situation of the issuer of the note so as not to be surprised before its maturity. On the contrary, its greatest guarantee lies in the viable solvency and equity guarantee of its issuers. Because in effect, you will have no choice but to look at the company to which you direct your money since it must provide a more than proven solvency so that you do not get more than one negative surprise from now on.

You need a profitability higher than that generated by the risk-free investments. The biggest problem lies more in small and medium-sized companies than in large ones. The reason is that there is no independent rating on your financial solvency, as is the case with those with the largest capitalization or that are frequently listed on the stock exchanges. To avoid any type of incident with this financial instrument, it will be necessary for its issue to be registered with the National Securities Market Commission (CNMV). Otherwise, there will be no remedy other than distrust as the main preventive measure.

Issuers of the promissory notes

There is no defined profile in the profile presented by the issuing companies of the promissory notes. Very low capitalization business lines may not be present in banks other than those listed in the selective index of Spanish equities, IBEX 35. In this last group, it is exactly the construction companies that mostly choose to issue this class of securities. Some of the listed companies that have launched a product of these characteristics are ACS, Acciona, OHL or Sacyr. With different returns depending on their issues, even if they come from the same company.

At this point you may come to the dilemma about whether it is better invest in your actions at market price or on the contrary through an agreed and fixed amount before contracting. In other words, to reach the positions of these companies, it can not only be reached through equities, but also through private fixed income. However, one of its greatest risks is that its early cancellation is necessary since sales must be formalized in the secondary market. With very little liquidity, and in danger of losing part of the invested capital.

Profitability offered by this product

En cuanto al interés que brindan estos pagarés, no existe uniformidad en las propuestas ofrecidas por las compañías. Pero por el contrario, el aumento de la rentabilidad está en línea con el riesgo que asume el Username with his subscription. De esta dinámica, los valores con mayor riesgo pueden pagar intereses close to the 8%. Whereas if this characteristic is not present, the usual thing is that it descends until it is in a range that goes from 3% to 5%.

These very wide differences, of almost five percentage points, are generated as a result of the price that must be paid for a increased risk. Where greater exposure will be accompanied by a more attractive annual interest and that no fixed income product offers today. From this general perspective, of course, many types of profitability can be found since it is not a homogeneous product, far from it. If not, on the contrary, it moves with important differences with respect to the profitability generated by commercial paper. Being one of the incentives at the exact moment of your hiring.

Other similar products

With respect to its profitability, the investment product that most closely resembles it is the dividend on the purchase and sale of shares on the stock market. Not because of their structure, but because they are the most profitable at the moment since few can offer you the 8% as fixed and guaranteed interest every year. Even when it is convenient to distinguish certain aspects between these two models of investment realization. Due to the fact that in dividends the risks are practically non-existent and derive from the fact that the shares are listed on the equity markets.

Another factor to pay attention between these two financial instruments is that which refers to the form of shape your prices. Because the shares are exposed to the verdict of the financial markets while, on the contrary, the notes of the company are governed by substantially different parameters that are more complex for their perfect understanding. Where risks are always much more latent and in cases it is almost a reality that can affect you in certain situations. Nonetheless, it's safe to say that corporate notes are one of the big unknowns in the investment industry. It is not surprising that it is an unpopular financial instrument among small and medium investors.

Unlisted companies

Another of the great characteristics of corporate notes is that they do not have to be issued by companies that are listed on the equity markets. Even though this is the general trend, also a significant number of companies that launch this product not included in list. Because what really matters is the actual status of your business accounts. This makes a company with little solvency offer you a higher return than usual and quite the opposite. In other words, with great security, it provides you with a significantly lower interest rate that hardly differs from what fixed income offers you at the moment.

If you need to contract this type of product, you should go to your usual bank to find out which companies have a promissory note of these characteristics available at that time. You should see what their particularities are and assess whether or not it is convenient for you to hire them. On the other hand, it has the great utility that it does not generate commissions nor does it have expenses for its administration or maintenance. From this scenario, it is quite true that money can be saved in its formalization in terms of other products intended for investment. Beyond the contributions that it can give you from any point of view. Because it is a product that you may not be very used to in its operations.